New Construction Actualization of Value of Pancasila in Economic

Policy Formulation

Tobirin

, Kadar Pamuji

and Siti Kunarti

Departement of Public Administration, Jenderal Soedirman University, Purwokerto, Indonesia

Department of Law, Jenderal Soedirnan University, Purwkerto, Indonesia

Keywords: new construction, policy formulation, pancasila economy

Abstract: Countries with extractive, exploitative and authoritarian political systems have failed to overcome poverty

and create prosperity for their citizens. On the other hand, countries that succeed in overcoming poverty if the

country has a competitive economic institution, an open and pluralist political system. Indonesia with a

Pancasila economy is faced with global challenges and a capitalist economic system that dominates the world

economy. The Pancasila economy which originates from the value of local wisdom is ineffective and fails to

overcome the nation's economic problems. The purpose of this research is to explain and analyze the value of

Pancasila which can be actualized in the formulation of economic policies that favor the people's economy.

Research methods with qualitative methods through in-depth interview approach to populist economic actors.

The results of the study show that Pancasila economy has basic values of people's economy with a family

spirit, collaboration is just a concept that is difficult to implement. The role of state actors and the economy

is still not optimal, and there is no political commitment in formulating the Pancasila economy in the

formulation and implementation of the overall national economic policy.The abstract should summarize the

contents of the paper and should contain at least 70 and at most 200 words. It should be set in 9-point font

size, justified and should have a hanging indent of 2-centimenter. There should be a space before of 12-point

and after of 30-point.

1 INTRODUCTION

Indonesia is a country that has the honorable goal

which is stated in the opening of the 1945

Constitution of the Republic of Indonesia. The aim is

to promote public welfare, educate the life of the

nation, and participate in carrying out world order

based on independence, everlasting peace and social

justice (UUD 1945). This honorable goal has become

the thought and hope of the nation's founding fathers,

especially in realizing the value of social justice for

all Indonesians. The value of social justice as a form

of derivation from the values of divinity, humanity,

unity, becomes integrated in the implementation of

social justice to achieve general welfare. This means

that the direction and purpose of the nation must

achieve justice for all its people. Likewise,

development will succeed if there are no more gaps

and injustices in various aspects of life. The

Introduction should give a short overview of previous

studies avoiding a detailed literature survey or a

summary of the results; it should state clearly the

object of the work and highlight its significance.

The history of the Indonesian nation's journey

shows that there is still a problematic problem of

inequality and a sense of justice in enjoying the

results of development, not only during the Old era,

but in the era of the New Order and the reformation

of the gap problem, there were still obstacles in

realizing the ideals of the Indonesian people. One

issue of inequality is regional imbalances. To date the

issue of regional disparity has centered on the gap

between villages and cities, between Eastern

Indonesia and Western Indonesia, and between Java

and outside Java. (Saratri Wilonoyudho 2009)

In addition to regional gaps, the economic gap

widens, data in March 2016 Indonesia's population

below the poverty line reaches 28.01 million people

or 10.86% this figure is still slightly better than the

September 2015 data which reached 28.51 million

people or 11.13% poor. In March 2017 the number of

poor people, population with per capita expenditure

Tobirin, ., Pamuji, K. and Kunarti, S.

New Construction Actualization of Value of Pancasila in Economic Policy Formulation.

DOI: 10.5220/0009920509370941

In Proceedings of the 1st International Conference on Recent Innovations (ICRI 2018), pages 937-941

ISBN: 978-989-758-458-9

937

per month below the Poverty Line) in Indonesia

reached 27.77 million people (10.64 percent of the

total population), this number increased 6.90

thousand people compared to the conditions

September 2016 which amounted to 27.76 million

people (10.70 percent)

Ironically, Indonesia is a country that has rich

natural wealth but its people are poor, more

concerned about only a handful of people who have

abundant wealth. Oxfam's data showed that the

results of development are only enjoyed by a handful

of the rich and the rest are contested by some poor

people, the wealth of the four richest people in

Indonesia is equal to the wealth of 100 million poor

people. This shows a very real gap. If this is left

unchecked it will cause the impacts that can be

caused, namely: 1) the occurrence of economic

inefficiency, especially in the absence of collateral, 2)

causing inefficient asset allocation, and 3) weakening

social stability and solidarity. Another consequence

of the problem of inequality is closely related to the

problem of poverty. The portrait of poverty is very

contrasting because some people live in abundance,

while some lives in deprivation. Wealth for some

people means poverty for others. The substance of the

gap is the inequality of access to economic resources

and a sense of justice with social problems (Syawie

2011)

Another fact is the mandate of Article 33

Paragraphs (2) and (3) of the 1945 Constitution of the

Republic of Indonesia which clearly states that

production branches which are important for the State

and which control the livelihood of the public are

controlled by the State. The earth, water and natural

resources contained therein are controlled by the State

and used for the greatest prosperity of the people. In

fact, the conditions are different from the goals and

ideals of the Indonesian people that have been

mandated together in the constitution. Natural

resources are heavily exploited by foreigners.

Countries such as the United States, Britain, China,

the Netherlands, Japan, France and others control and

exploit natural resources in the name of investment.

Foreign companies such as Freeport, Exxon Mobile,

Newmount, Shell, Petrochin exploit Indonesia's

natural resources massively without thinking about

the usefulness and sustainability of sustainable nature

and the prosperity of the surrounding area.

Problems are increasingly complex in line with

the spirit of globalization and free markets which are

colored with concrete forms, namely joint, regional

and international markets. The free market is a

hallmark of economic globalization that requires

economic activity to be left to the rules that have been

jointly determined through agreements between

countries both within the regional and international

scope. The rules and collective agreements require

that inter-state policies in the economy have no

discrimination, especially in trade through export-

import between countries. The economic system is a

necessity for the state to carry it out, the attachment

to market freedom is sometimes not present to

regulate the economy based on a common welfare

orientation. Globalization in the economic field will

create interdependence in the process of production

and marketing, and in the field of politics create

liberalization. (Nugroho, 2001)

This global problem demands the Pancasila

economic system which is the identity of the nation

faced with various problems. Indonesia's economic

system is between the interests of the liberal capitalist

and socialist economics, at this time it tends towards

liberal capitalism because the role of the state is

limited to the night watchman. The state has

withdrawn from its duties and responsibilities in

carrying out the mandate of Article 33 of the

Constitution of the Republic of Indonesia in 1945.

This fact is seen by the exercise of strategic natural

resources owned by foreigners, the gap and poverty

are increasingly sharp. Besides that, the task of the

state in providing protection to the poor is

increasingly questionable, subsidies are withdrawn,

the cooperative economic economy does not get an

appropriate portion in economic policy, privatization

becomes an unhealthy SOE solution.

This fact provides a signal to revitalize the

economic role of Pancasila with the principles of

kinship, togetherness and prosperity. Pancasila

economy is not only a guide star but is able to be

realized in strategic steps in the formulation of

economic policies. Therefore, it is imperative to

formulate Pancasila economics philosophically,

operational practices become joint demands.

2 METHOD

This study uses a qualitative approach that is

about the researchers beliefs based on research

experience and the nature of the problem. As a

research with qualitative methods, this research

explores data from the perspective of research

subjects. Researchers place research subjects as

individuals who know best about the problem.

Researchers also place themselves as neutral figures

who do not have special alliances with certain parties

and are not related outside settings that might

interfere with the subject. Researchers protect

ICRI 2018 - International Conference Recent Innovation

938

research subjects to develop trust and feel easy with

the presence of researchers, so that familiarity with

them can be maintained. This is considered important

by researchers to explore all the information needed.

Data is processed in a reflective manner by

researchers, especially by researchers who are

directly involved in data collection with the

informants studied. Data that has been collected is

then compiled and examined. If it is not sufficient, the

data is added by plunging back into the field as

needed. Adding data can still be done when a lack of

data is identified during analysis or report writing.

This is possible especially if the data is qualitative

data. (Bungin 2001).

3 DISCUSSION AND ANALYSIS

PROBLEMS AND

CHALLENGES OF PANCASILA

ECONOMY

Changes to an economic system that matches the

honorable values possessed by the civilized

Indonesian people, the existence of honest,

democratic and open People's Economic Ethics,

which emphasizes collective action and cooperation,

are the key to health and national economic recovery

from prolonged crisis conditions. This is the national

development moral that believes in the strength and

resilience of the nation's own economic togetherness

and religion. (Supriyanto 2009)

The hope to return to the economic system that is

based on the values and culture of the local

community, namely Pancasila, is faced with crucial

problems and challenges. Suroto (Suroto 2017) gave

opinion that the reformation era is going on with a

strong effort to overcome the economic crisis.

Previous economic models oriented to state

capitalism (state-led capitalism) experienced

increasingly drastic changes to capitalistic market-

leadership orientation (market-led capitalism) to be

compatible with free markets. National economic

policies ultimately subject to the rules of the game

"Washington Consensus" sponsored by the United

Kingdom and America with its Trimatrices:

liberalization, deregulation and privatization.

The Indonesian government must accept various

multilateral free market policies and remove all

regulatory barriers for the free flow of capital, goods

and services. The government was also forced to

privatize various national business entities and

natural resources. The process of political

consolidation occurs with various policy

compromises which must be "friendly" to market

interests. The position of the state becomes sub-

ordinate towards the global market. Market

leadership that subordinates the state and society

determines the pattern of economic policy that places

the state in a position as a "night watchman" to

become a "janitor". This was marked by a large fiscal

allocation policy to bail out the crisis of banking due

to the conjunctural economic crisis with the release of

a bail-out through the Bank Indonesia Liquidity

Assistance scheme (BLBI) which left a problem until

now. The total state losses and the restructuring costs

of banking from 1997-2004 to 640.9 trillion if

calculated by the growing exchange rate, the current

value is approximately 2000 trillion rupiah (Fitra

2017). Then the privatization of various natural

resources, state-owned enterprises was marked by the

signing of the new SOE Law, the Investment Law and

the Coal Mineral Act, the Banking Act, and others

that have been separated from national interests. It

can be seen how many economic laws were annulled

through Constitutional Court decisions such as Water

Law, Electricity, Cooperatives and others which are

essentially considered unconstitutional

In the end, Indonesia is fully entered into the trap

of constant economic growth with increasingly

worsening conditions facing natural resources and

ecological crises at the same time. The quality of our

economic growth not only does not show economic

injustice, but also only relies on consumption factors

supported by food imports. The domestic economy,

especially our food and energy sector, has become

neglected and we suffer from dependence on the

extractive economic sector which is highly dependent

on international market fluctuations and at the same

time the oligopoly of international economic actors.

The people's economic valve is increasingly open

and sucked into the tertiary economic sector,

especially the banking sector. While our banking

regulations are listed as the most illegal in the world

by allowing foreign investment up to 99 percent. The

contribution of economic growth from the

consumption sector to 70-80 percent which is more

dependent on finished food importation, so that what

Bung Hatta warned in 1931 became a reality, we have

made the economy which should be the peak of the

base and the base being the peak.

At the present, even our fiscal conditions are

vulnerable because they are always in the threat of

short fall or not achieving tax targets. Moreover,

because of the high social burden of social spending

for the provision of education, health costs and so

forth. Then, the strategy to swell the debt is the

solution. Increasingly swollen debt to cover the fiscal

New Construction Actualization of Value of Pancasila in Economic Policy Formulation

939

deficit and pursue the ambition of infrastructure

development which is actually a supporting factor for

the smoothness of foreign investment whose dividend

costs are greater than the benefits we receive.

The amount of our debt until July 2017 has

reached 3,672.33 trillion rupiah. A drastic increase

occurred during the Jokowi-JK Government which

was only 2.5 years old amounting to 1,067.4 trillion

rupiah. That means if divided by our population of

259 million people (Susenas 2010), it means that

approximately every person and including a newborn

baby must bear a debt of 16 million rupiah. Our

maturing debt in 2018 is 810 trillion and if we cannot

reschedule then we will experience the threat of

bankruptcy and can lead to the emergence of political

turmoil that can be out of control.

Average Economic growth in the decade is 5.6

percent and the annual Gini Ratio continued to

increase from 0.33 in 2004 to 0.41 in 2013, and it was

the highest income gap figure since Indonesia's

independence. According to the World Bank (2016),

as much as 0.02 percent of the total population

controls our total Gross Domestic Product (GDP) up

to 25 percent and 1 percent of the total population

controls 52.3 national total assets. According to data

from the Central Statistics Agency (BPS), currently

87 percent of our land is controlled by only 0.2

percent of the population. One person can control a

land of up to 5 million hectares while many people

call themselves citizens but do not have complete

land as well. Our society is not only separated from

the land where they grow to survive (subsistence), but

has been included in the dependence on the imported

food cartel mafia.

4 NEW CONSTRUCTION OF

PANCASILA ECONOMY IN

FORMING REGULATION

Problems and facts about the Indonesian economy

lead to capitalist interests becoming increasingly

thick with liberal economic policies. The

responsibility of the state in accordance with the

mandate of Article 33 of the 1945 Constitution of the

Republic of Indonesia is ignored. Keep in mind, the

importance of re-affirming the ideals of the

Indonesian people to implement the Pancasila

economic system. Sudrajat explained that Indonesia

as a country that embraces Pancasila ideology, and

also adheres to the Pancasila economic system will

apply economic values mandated by Pancasila. The

kinship or institutional economic system mandated by

Pancasila is a family economic system, which can be

interpreted to develop the economy independently

with the understanding that it is not permissible to

rely on foreigners or commonly called citizenry-

based economy (Sudrajat 2017)

On that basis, Pancasila as the Indonesian

ideology became the reference of the 1945

Constitution of the Republic of Indonesia, should be

a policy reference, and the derivative of this policy is

the laws and regulations below it, from policy

formulation, implementation to policy evaluation.

includes: 1) The principle of the Supreme Godhead is

the moral basis of the economic behavior of

Indonesian people. It is expected that the policies

made by the government include the divine principle

of the Almighty which is to consider the moral and

characteristics of the Indonesian economic moral

system that indeed has underlie or become a guideline

for the economic behavior of individuals, groups in

society. 2) Fair and Civilized Humanity Value. There

is a strong will and the whole community to realize

(egalitarian) social equality according to

humanitarian principles. 3) Indonesian Unity. the

priority of economic policy is the creation of a strong

national economy. This means that nationalism

animates every economic policy. The spirit of

nationalism in the economic field always animates the

Indonesian nation. In carrying out the economic

system of joint ventures based on the principle of

kinship must be able to accommodate the interests of

the three main actors, namely cooperatives, state

enterprises and private businesses. From this point

arises the notion of collectivism (communitarianism),

namely society (society) with the understanding of

togetherness (mutualism) and kinship (brotherhood),

along with the mutual interest (mutual interest) that

accompanies it, placed in the main position. 4)

Popularism led by Wisdom in Consultation /

Representative Policy. Cooperatives are the pillars of

the economy and are the most concrete form of joint

effort. Cooperatives as economic organizations with

social character are organizations or associations of

people not capital associations formed by its members

to serve their interests, namely to help fight for their

interests, especially in an effort to improve their

welfare. This means that the mission of the

cooperative is the best service and to the maximum

extent possible to members. 5) Social Justice for All

Indonesians. There is a clear and firm balance

between national level planning and decentralization

in the implementation of economic policies to achieve

economic justice and social justice. The Indonesian

people included social justice for all the people as the

ultimate goal which was described as a just and

ICRI 2018 - International Conference Recent Innovation

940

prosperous society, which was weak in the way of

raharja, because the final manifestation of the

intended national community was clearly intended as

a society containing complete characteristics of

justice and prosperity. which includes legal,

economic, political, socio-cultural, and moral justice.

The meaning of constructing the value of

Pancasila manifests itself in the value of social

justice, therefore Sukarso (Sukarson 2017) argued

that if the economic understanding literally connotes

how limited resources can be used optimally, then

economic policies tend to be related to the issue of

distribution and allocation of benefits for the

Indonesian people. Therefore, economic policy must

be appropriate and not in conflict with the value of

social justice for all Indonesian people based on the

values of divinity, humanity, unity and popularness.

There are American scientists, not Indonesians who

have Pancasila, who may not know about Pancasila,

phenomenally say that the important government

(State Administration) task is not to find effective and

efficient ways or fulfill the choices of its citizens but

how to create social justice for its citizens. This idea

is known as the New State Administration, but

unfortunately there are less followers, even in

Indonesia, because it may not be fundamentally

compatible with liberal-capitalist thinking.

5 CONCLUSIONS

Pancasila economics should save Indonesian people

from poverty, the trade mafia, and not just save the

capital / investment. The Indonesian Economy Must

be able to reaffirm the spirit of contradiction that

requires the state to be responsible for public welfare.

Basically, there are several principles that must be

elaborated in the Pancasila economic system

including: (1) the party who controls the lives of

many people is the state/government; (2) The role of

the state is important but not dominant, and so is the

role of the private sector whose position is important

but does not dominate. So there is no condition of the

liberal economic system or command economic

system. Both parties, namely the government and the

private sector, live side by side, side by side

peacefully and support each other. (3) The

community is an important part in which production

activities are carried out by all for all and led and

supervised by members of the community. (4) Capital

owners do not dominate the economy because it is

based on the principle of kinship among human

beings. (5) Social justice is a joint commitment in

implementing the country's economy based on

equality and mutual welfare.

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